In September, Martin Shkreli, former hedge fund manager and the founder and chief executive of Turing Pharmaceuticals, become the poster child for the high cost of life-saving drug treatments. Turing sharply raised the cost of Daraprim, a 62-year-old off-patent drug used for treating a life-threatening parasitic infection.
When the Daraprim story broke, politicians saw an opportunity to tackle an issue that had drawn ample media attention -- the cost of pharmaceutical treatments. Democratic presidential candidate Hillary Clinton used Turing's actions as the news hook to release her own plan to reduce drug prices:
"It is time to deal with skyrocketing out-of-pocket costs and runaway prescription drug prices," she said. She referred to a Sunday New York Times report on how a 62-year-old medicine jumped from $13.50 a pill to $750 after a company bought it last month. She added: "Nobody in America should have to choose between buying their medicine and paying their rent."
While Clinton's efforts to crack down on the pharmaceutical industry captured much of the press's focus, her plan also acknowledged that health insurance companies play a central role in rising prescription drug prices.
When patients find themselves facing a serious illness, they should be able to trust that their doctor is able to choose the most effective treatment. Unfortunately, in too many instances that is not the case, in particular, with specialty drugs, which treat complex and chronic diseases.
Before doctors can prescribe a treatment, they must deal with the bureaucracy and red tape of the patient's insurance company that often puts its bottom line ahead of patient health. Insurance companies get between patients and the most-effective drug treatments in a variety of ways.
According to the Commonwealth Fund, insurance companies use what are called cost-sharing tiers to pass the cost of live-saving treatments onto patients:
...insurance companies are shifting drug costs onto consumers, largely through changes in their drug formulary designs. Although many insurers have long had tiered formularies that offer low cost-sharing for generic drugs and higher cost-sharing for brand-name drugs, the practice has expanded in recent years, with insurers adding an upper tier to their formularies. These so-called specialty tiers have very high cost-sharing, often through coinsurance (a percentage of the total cost) instead of a copayment (a fixed dollar amount).
Specialty-tier drugs offer life-saving treatment to some of our sickest and most vulnerable patients, such as those with hemophilia, hepatitis, multiple sclerosis, HIV/AIDS and cancer. Yet the price tag for these treatments can be staggering, with consumers owing thousands of dollars each month in coinsurance bills.
Insurance companies also may require a "prior authorization" from the insurer before a doctor can prescribe specialty drugs. This process can add significant delay in getting treatment to patients, as well as drive up administrative costs for doctors.
Another insurance company tactic, called "fail first," requires that patients try the lowest-cost treatments first, despite what the doctor recommends, and only use more expensive treatments if the cheaper therapy fails to treat the illness. This process can lead to a significant amount of time passing before a patient begins a course of treatment that actually works, during which time the condition could worsen.
Insurance companies are also increasingly narrowing the lists, what's known as the "formulary," of drugs they are willing to approve. This means if the most effective drug is not on the list, the patient must weigh taking a less effective drug or paying the full cost.
As we learned during the congressional debate over the Affordable Care Act, driving down the cost of health care is a goal we should work to achieve, but not at the expense of denying those suffering from rare or life-threatening diseases the most effective treatments.
A 2014 study in Health Affairs found that while specialty drugs often cost more than traditional drugs, they have greater benefits -- and as such, may still be a reasonable value for the money. The study found that specialty drugs offer better quality and quantity of life lived than traditional drugs.
For example, since the introduction of antiretrovirals in 1995, the death rate of HIV/AIDS has fallen by 83 percent in the U.S.
New drugs and treatments have transformed patient health outcomes for those suffering from heart disease, HIV, cancer, diabetes, high cholesterol, mental health issues and central nervous system conditions. But, all the medical innovation in the world won't matter if patients can't afford the treatments.
Americans are overwhelmingly concerned about the high cost of prescription drugs, but the reason patients are paying more needs to be brought to light. Failure to address the role insurance companies play in both drug costs and limiting drug choices puts patients at risk and jeopardizes innovation of future treatments.